Evidence of Unexpected Results Key to Grant of Substitute Claims in Inter Partes Review Proceeding
By Melissa R. Gibson, Akin Gump
In Valeo North America, Inc. v. Schaeffler Tech. AG & CO. KG, after finding that all original claims of the patent were unpatentable during an inter partes review (IPR) proceeding, the Patent Trial and Appeal Board granted, in part, the patent owner’s motion to amend. The Board allowed substitution of two new claims based on unexpected results of the claimed inventions, despite patent owner’s concession that each element in the substitute claims is taught by the prior art of record.
In its IPR petition, the petitioner challenged the patentability of all original claims of U.S. Patent No. 8,161,740 (the “’740 Patent”) as obvious in view of three combinations of prior art references. When assessing the patentability of the original claims, the Board found that each element of the challenged claims was disclosed in the prior art of record and that there was motivation to combine the prior art. To rebut obviousness, patent owner argued that unexpected results establish that the claimed inventions were not obvious. However, patent owner demonstrated that only one, not all, embodiments falling within the claim scope will experience the unexpected results. The Board concluded that patent owner was not entitled to the presumption of nexus because the unexpected results were not commensurate in scope with the claims. Therefore, after affording the evidence of unexpected results very little weight, the Board concluded that petitioner demonstrated by a preponderance of the evidence that the challenged claims of the patent were unpatentable based on two combinations of the prior art of record.
Next, the Board considered patent owner’s contingent motion to amend, which sought to substitute new claims 14-25 in place of original claims 1, 2 and 4-13. To demonstrate patentability of the substitute claims, patent owner had the burden of proving that each substitute claim is patentably distinct over the prior art of record in the proceeding. However, before turning to the merits of patentability, the Board rejected petitioner’s assertion that three technical issues defeated patent owner’s motion to amend. Specifically, the Board found that (1) although patent owner did not specify the contingency of the motion on a claim-by-claim basis, its statement of contingency was sufficiently clear; (2) patent owner’s failure to follow best practice by providing construction for each added claim term that may be disputed was not fatal; and (3) patent owner made it clear that it intends to rely on secondary considerations to demonstrate nonobviousness, and it did not contend that the limitations of the substitute claims are missing in these references. In fact, the parties and the Board do not dispute that each element of the substitute claims is present in the prior art. Instead, patent owner argues that the patentability of the substitute claims is based on unexpected results. Therefore, the patentability analysis of the substitute claims focused on patent owner’s evidence of unexpected results.
Before turning to secondary considerations, the Board acknowledged that the same motivation to combine the references applies to the substitute claims, but that the totality of the evidence indicates that petitioner’s basis for the motivation to combine is not strong. Next, the Board concluded that nexus existed for two substitute claims—Claims 19 and 25—because patent owner demonstrated that the structure that yields the purported unexpected results is reasonably commensurate with the structure recited in two substitute claims. After examining each substitute claim, the record supported that only the claimed structure performed optimally at the conditions required by Claims 19 and 25. Finally, the Board determined that the inventions of Claims 19 and 25 achieve unexpected results. Probative evidence of unexpected results “must establish that there is a difference between the results obtained and those of the closest prior art, and the difference would not have been expected by one of ordinary skill in the art at the time of the invention.” Id. at 62 (quoting Bristol-Myers Squibb Co. v. Teva Pharm. USA, Inc., 752 F.3d 967, 977 (Fed. Cir. 2014)). Furthermore, the Board must “evaluate the significance and ‘kind’ of expected results along with the unexpected results.” Id. The Board concluded that the results of these claimed inventions show the “kind,” and not just the “degree” of unexpected results that a person of skill in the art would not have known or expected at the time of invention. Therefore, the Board determined that Claims 19 and 25 are patentable over the prior art of record, but Claims 14-18 and 20-24 are not patentable over the prior art.
Valeo North America, Inc. v. Schaeffler Tech. AG & CO. KG, IPR2016-00502, Paper 37 (PTAB June 20, 2017).
N.D. and E.D. Tex. Courts Find Waiver of Venue Defense Notwithstanding TC Heartland Decision
By Andrew Ford Schwerin, Akin Gump
The Supreme Court’s recent holding in TC Heartland settled several points of law: first, 28 U.S.C. § 1400(b) is the “sole and exclusive provision controlling venue in patent infringement actions; second, the broader venue provisions in 28 U.S.C. § 1391(c) are not applicable to patent infringement cases; and third, TC Heartland reversed the Federal Circuit’s decision that reaffirmed VE Holding and held that “the current version of § 1391 does not contain any indication that Congress intended to alter the meaning of § 1400(b) as interpreted in Fourco.” In the aftermath of TC Heartland, there have been inconsistent approaches to the question of waiver and whether the recent Supreme Court decision constitutes new law. Two such decisions are detailed, below.
Elbit Systems v. Hughes Network Systems commenced in 2015 with Elbit suing multiple defendants in the Eastern District of Texas on patents relating to broadband satellite systems. Although the complaint asserted venue under both 28 U.S.C. § 1391 and § 1400(b), the subsequent motions to dismiss on venue grounds contested venue within only § 1391(c)(2). The court denied the motions under then-existing law. On June 3, roughly two weeks after TC Heartland, (and with a trial date set for the end of July), defendants filed motions to transfer under 28 U.S.C. § 1406 for improper venue and to stay pending resolution of venue.
In Judge Payne’s decision denying both motions, he first acknowledged that venue is a defense that, if available, is waived if it is not raised at the outset of the case pursuant to Federal Rules of Civil Procedure 12(h)(1)(A) and 12(g)(2). The court decided, however, that the venue defense always had been available and reasoned that TC Heartland did not change the law; it reaffirmed that the Supreme Court’s 1957 decision in Fourco had been the law all along. The court so held notwithstanding the Federal Circuit’s 27-year old precedent in VE Holding that was binding on all district courts presiding over patent infringement cases. While defendants argued that because of VE Holding it was “well known” that any motion under 1400(b) would have been viewed as “meritless . . . that does not change the harsh reality that Hughes would have ultimately succeeded in convincing the Supreme Court to reaffirm Fourco, just as the petitioner in TC Heartland did.”
Similarly, the court in iLife Technologies, Inc. v. Nintendo of America, Inc. was confronted with a motion to transfer with a fast-approaching trial date. Although in its Answer Nintendo admitted venue was proper under §§ 1391 and 1400(b), it filed a motion to transfer venue under 28 U.S.C. § 1404, which was ultimately denied. Following TC Heartland, Nintendo renewed its motion to transfer or dismiss under 28 U.S.C. § 1406. The plaintiff opposed the motion on two grounds: that TC Heartland did not constitute a “change in law,” and that even if it did, it would not qualify for an exception under Fifth Circuit law.
The court held that TC Heartland did not constitute a change in law, and accordingly did not reach the issue of waiver under Fifth Circuit law.
Both of these decisions were in mature cases with trial dates fast approaching – a factor that likely impacted the ultimate conclusion.
Elbit Systems Land and C4I Ltd. et al v. Hughes Network Systems LLC et al, 2-15-cv-00037 (E. D. Tex, June 20, 2017, Order)
iLife Technologies, Inc. v. Nintendo of America, Inc., 3-13-cv-04987 (N.D. Tex. June 27, 2017, Order) (Lynn, USDJ)
Comcast Prevails in Part on Striking OpenTV Infringement Contentions
By R. Tyler Kendrick, Akin Gump
On June 19, 2017, Northern District of California Judge William Alsup granted-in-part and denied-in-part plaintiff Comcast Cable Communications, LLC’s (“Comcast”) motion to strike defendants OpenTV, Inc. and Nagravision SA’s (collectively “OpenTV”) infringement contentions. The court, however, did not strike with prejudice but instead treated Comcast’s motion as a motion to compel amendment of OpenTV’s infringement contentions so that OpenTV could cure deficiencies.
This dispute began in October 2015 when OpenTV approached Comcast about licensing its patent portfolio because it believed certain Comcast products infringed its patents. In October 2016, Comcast filed a declaratory judgment action of non-infringement of ten patents in OpenTV’s portfolio. On March 27, 2017 OpenTV submitted its infringement contentions, which Comcast moved to strike on April 20. In its motion to strike, Comcast contends that OpenTV’s infringement contentions violate Rule 3-1 by: “(1) relying too much on ‘information and belief,’ (2) charting asserted claims for only one or two accused products despite purporting to accuse more products of infringement, (3) asserting indirect infringement theories in generic terms by merely tracking the pertinent statutory language, (4) using only boilerplate language to assert infringement under the doctrine of equivalents, and (5) failing to identify specifically the patent owners’ own ‘instrumentalities and products purportedly embodying [one of the asserted patents].’”
Comcast’s first argument relied on the language of Rule 3-1, which requires an infringement chart to specify where and how each limitation is found in the accused products. The court noted, however, that Rule 3-1 does not prohibit allegations made upon “information and belief.” The Rule distinguishes between identifying elements of the accused product alleged to practice a claim limitation and items of proof showing that the accused elements in fact practice the limitation. The court found that this distinction was appropriate given Comcast’s restriction of its source code and set-top boxes. The court ultimately rejected Comcast’s arguments that OpenTV’s contentions were vague and/or conclusory.
Comcast next argued that OpenTV failed to show that the claims and products charted in its contentions were appropriately representative of all accused products. The court agreed that OpenTV had not shown that all accused products shared the same characteristics as the allegedly representative ones. In fact, OpenTV’s proposed amended contentions called into question whether the originally-charted products were representative because OpenTV refused to limit the universe of accused products based on the characteristics that OpenTV previously alleged were common to all accused products. The court, therefore, did not grant OpenTV leave to amend its contentions to address whether the originally-charted products were representative.
Comcast also argued that OpenTV’s contentions concerning indirect infringement were conclusory and insufficient. OpenTV argued that it incorporated Comcast’s user manuals and screenshots of Comcast’s website to show how Comcast instructed its customers. OpenTV did not, however, expressly tie Comcast’s marketing materials to its allegations of direct infringement. The court found that including boilerplate language without describing what instructions led to what infringing behavior was not enough to disclose indirect infringement under Rule 3-1.
Finally1, Comcast argued OpenTV failed to disclose adequately its theory of infringement under the doctrine of equivalents. The court agreed.
The court granted Comcast’s motion, but did not do so with prejudice. Instead, the court permitted OpenTV to amend its infringement contentions to cure the deficiencies, consistent with the court’s opinion.
Comcast Cable Commc’ns, LLC v. OpenTV, Inc., No. C 16-06180 WHA (N.D. Cal. June 19, 2017).
1Comcast also argued that OpenTV did not demonstrate that the patent owners’ own ‘instrumentalities and products purportedly embodying [one of the asserted patents]. But OpenTV withdrew this assertion, mooting this point.
Method-of-Treatment Claims That Did Not Require a Specific Level of Efficacy Held Unpatentable as Obvious in Light Of References Describing Clinical Trials
By Jason Weil, Akin Gump
The Patent Trial and Appeal Board (the “Board”) issued a final written decision in an inter partes review determining Claims 1-5 of U.S. Patent No. 8,889,135 owned by Abbvie Biotechnology Ltd. unpatentable as obvious. Those claims cover methods of treating rheumatoid arthritis by administering—once every 13-15 days (i.e., biweekly) for a time period sufficient to treat the rheumatoid arthritis—40 mg of an antibody having certain sequences. The antibody D2E7, the active ingredient in Humira, is an antibody used in such a dosing regimen. The Board concluded that the challenged claims would have been obvious in light of two prior art references – van de Putte 2000 and Rau 2000 – which each described the results of clinical trials using D2E7.
Critical to its conclusion, the Board had construed “for a time period sufficient to treat rheumatoid arthritis” under the broadest reasonable interpretation standard as “for a time period sufficient to reduce the signs, symptoms, and/or progression of RA.” Boehringer Ingelheim Int’l GMBH et al. v. Abbvie Biotechnology, Ltd., IPR2016-00408, Paper No. 46 at 11 (PTAB July 6, 2017). The Board stressed that its construction did not require any particular level of efficacy.
The petitioner argued that biweekly dosing is the only claim element that is not expressly disclosed in van de Putte 2000, which teaches weekly dosing at a variety of doses (including 20 mg). Biweekly dosing is, however, expressly taught by Rau 2000, and it would have been obvious to try such dosing with a reasonable expectation of success based on the antibody’s half-life and the results of the three fixed doses in van de Putte. Abbvie did not challenge that all claim elements are present in the combination of van de Putte 2000 and Rau 2000, but alleged that one of skill in the art would not have been motivated to combine the references, and the art actually taught away from such a combination. According to Abbvie, Rau shows that biweekly dosing with 0.5 mg/kg (equivalent to a fixed dose of 40 mg in the average patient of 80 kg) was inter alia insufficient across the entire population. The Board noted that Abbvie’s arguments that related to lower efficacy had some merit, but found that Rau 2000 did not indicate that the 0.5 mg/kg does was “ineffective.” The Board again stressed that its construction of the term “for a period of time sufficient to treat rheumatoid arthritis” did not require any particular level of efficacy.
Turning to the objective evidence of nonobviousness, there was no dispute that Humira has been commercially successful. The petitioner successfully argued, however, that it is unclear whether such success is due to the claimed dosing regimen in the challenged claims or due to the prior art attributes, such as the fully humanized antibody itself. Accordingly, the petitioner rebutted any presumption that the commercial success of Humira was due to the claimed dosing regimen. The Board found that Abbvie’s evidence of long-felt need was insufficient because the dosing regimen was available in the prior art, and Abbvie failed to tie its evidence to the 40 mg dose recited in the claims. Finally, the Board rejected Abbvie’s arguments that the claimed dosing regimen would have been unexpected for the same reasons it rejected Abbvie’s teaching-away arguments related to the efficacy of the dosage. Having considered all of the evidence, the Board rendered its final conclusion that the challenged claims would have been obvious.
Boehringer Ingelheim Int’l GMBH et al. v. Abbvie Biotechnology, Ltd., IPR2016-00408, Paper No. 46 (PTAB July 6, 2017).
PTAB Confirms Decision Denying Institution Based on District Court Action Ultimately Dismissed Without Prejudice
By Jay K. Tatachar, Akin Gump
On July 6, 2017, the Patent Trial and Appeal Board (the “Board”) denied Petitioner Ford Motor Company’s (“Petitioner”) request for rehearing of the Board’s decision denying institution of multiple inter partes reviews (IPR) based on its finding that, under 35 U.S.C. § 315(b), the petitions were filed more than one year after the date on which the Petitioner was served with a complaint alleging patent infringement.
The dispute dates back to February 19, 2015, when Petitioner filed the first action (the “Ford action”) in the Eastern District of Michigan, seeking declaratory judgment of noninfringement of three Versata Development Group, Inc. (“Patent Owner”) patents. Then, on May 7, 2015, Patent Owner asserted infringement by Petitioner of six patents (the same patents later challenged in the IPR) in the Eastern District of Texas (the “Versata action”). On October 28, 2015, Patent Owner answered Petitioner’s declaratory judgment complaint in Michigan and asserted the same six patents from the Versata action. On November 5, 2015, the Texas court “ordered the parties to file notice of any good faith reasons that [the Versata action] should not be dismissed, without prejudice, so that the issues may [be] dealt with in the Michigan court.” On December 3, 2015, noting that “neither party has provided arguments against dismissing the case,” the Texas court dismissed the Versata action without prejudice to Patent Owner’s ability to assert its claims in the Michigan court. On October 28, 2016, Petitioner filed its IPR petitions related to Patent Owner’s six patents. Finally, on May 1, 2017, the Board denied the institution of the IPRs based on the filing of the petitions more than one year after May 7, 2015 (i.e., the date Patent Owner served its complaint in the Texas court).
In its request for rehearing, Petitioner essentially argued that, based on precedent, the May 7, 2015, date should not have been used to start the one-year clock to file a petition under § 315(b). Specifically, Petitioner argued that (1) the Board misapplied the binding precedent of the Federal Circuit and the Board by refusing to hold that the dismissal “without prejudice” of the Versata action has no legal effect under § 315(b) and must be treated as if the action had never been filed, and (2) the Board misapplied the law in holding that there is a “continuous chain of assertion” exception to the precedential rule that a complaint dismissed “without prejudice” has no legal effect under § 315(b).
In addressing Petitioner’s first argument that the Board failed to follow precedent, the Board noted that it is “bound only by the Board decision in Oracle and then only to the extent that we find the issues and facts involved in Oracle and in the instant proceedings are sufficiently similar.” The Board reiterated that “here, unlike in Oracle and other cases cited by Petitioner, the dismissal without prejudice was not pursuant to Rule 41(a), was not ‘voluntary,’ and, most importantly, did not leave the parties as though the action had never been brought.” Instead, the dismissal of the Versata action was “involuntary,” given that either party could have argued for retaining the Versata action and that, after dismissal, the parties no longer enjoyed the ability to bring the action in the Eastern District of Texas.
As part of its second argument that the Board misapplied the law in holding that there is a “continuous chain of assertion” exception to the precedential rule that a complaint dismissed “without prejudice” has no legal effect under § 315(b), Petitioner argued that the cases cited by the Board were distinguishable in that each case included an action that was consolidated. The Board dismissed this idea and instead found “that the effect of the rulings by the Michigan and Texas courts was to maintain continuous actions between the parties”— “[a] fact different from those present in the precedential decisions cited by Petitioner.” The Board noted that both the Texas and Michigan courts stated this much—the Texas court in its decision dismissing the Versata action and the Michigan court in its decision to adopt the schedule that would have been in effect in the Texas court.
Ford Motor Company v. Versata Development Group, Inc., IPR2017-00146, Paper No. 9 (PTAB July 6, 2017).
PTAB Grants Contingent Motion to Amend on Remand from Federal Circuit
By John Wittenzellner, Akin Gump
On July 17, 2017, the Patent and Trial Appeal Board (the “Board”) granted in-part, Patent Owner’s conditional motion to amend on remand from an appeal to the Federal Circuit. In a final written decision issued in April 2015, the Board found that all of the challenged claims were obvious under 35 U.S.C. § 103. In doing so, the Board also denied Patent Owner’s conditional motion to amend (with proposed substitute claims 26 and 27). The Federal Circuit upheld the Board’s decision on obvious and underlying claim construction. But it vacated the Board’s denial of the motion to amend as arbitrary and capricious because it failed to consider the patentability of the proposed substitute claims. Instead, the Board denied the motion on an apparent technicality because “the patent owner [did not] discuss whether each newly added feature was separately known in the prior art.”
On remand, the Board authorized Patent Owner to supplement its motion to amend and analyzed the motion to make “a determination of the patentability of the proposed substitute claims.” In doing so, the Board considered the requirements of 35 U.S.C. §§ 101, 102, 103, 112. The motion was denied with respect to claim 26 because the Board found that the amendments introduced new matter, contrary to 35 U.S.C. § 316(d)(3).
The Board, however, granted the motion with respect to claim 27, because the amendments did not add new matter, were definite, and were nonobvious in view of the prior art. Notably, Patent Owner also amended claim 27 to recite a “non-transitory computer-accessible medium” in view of the Board’s decision in Ex parte Mewherter, Appeal 2012-007692, (PTAB 2013), which held that a claim for a “machine-readable storage medium” violates Section 101 unless it expressly excludes non-transitory media, such as carrier waves. Petitioner attempted to strike the amendment as not being responsive to a ground of unpatentability involved in the trial under 37 C.F.R. § 42.121(a)(2)(i). But the Board held that the requirement should not be construed so as to require that “every word added to or removed from a claim in a motion to amend must be solely for the purpose of overcome[ing] an instituted ground.” Accordingly, 37 C.F.R. § 42.121(a)(2)(i) does not “preclud[e] additional modifications that address potential 35 U.S.C. § 101 or § 112 issues.”
Historically, Patent Owners have had limited success in filing conditional motions to amend. This decision, together with the related Federal Circuit decision, provide guidance as to what such a motion should contain and what information the Board will consider.
Veeam Software Corp. v. Veritas Technologies, LLC, IPR2014-00090, Paper No. 48 (PTAB Jul. 17, 2017).
2013 Decision on Assignor Estoppel Designated as Precedential by PTAB
By Ashley Edison Brown, Akin Gump
The Patent Trial and Appeal Board designated as precedential its October 25, 2013, decision to institute inter partes review and declined to apply the doctrine of assignor estoppel as an exception to 35 U.S.C.§311(a). Section 311(a) provides that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent.”
Here, the petitioner filed a petition for inter partes review, arguing that U.S. Patent No. 7,670,536, which relates to injection molding machines, was invalid under §§ 102 and 103. In its preliminary response, the patent owner claimed that the petitioner is barred from challenging the validity of the patent under the doctrine of assignor estoppel. The doctrine of assignor estoppel prohibits an assignor of a patent, or one in privity with him, from challenging the validity of that patent when he is sued for infringement by the assignee. See Semiconductor Energy Laboratory Co., Ltd. v. Nagata, 706 F.3d 1365, 1369 (Fed. Cir. 2013).
The patent owner argued that the petition should be barred because one of the named inventors is in privity with the Petitioner. The inventor was the founder, co-owner, president and CEO, and on the board of directors of the petitioner.
The PTAB determined that assignor estoppel does not apply here. An assignor who no longer owns the patent at the time of filing may file a petition for inter partes review under Section 311(a). The PTAB explained that Congress broadly granted the right to challenge the validity of patents through inter partes review. The PTAB compared AIA post-grant reviews to ITC investigations, finding that Congress explicitly stated that “all legal and equitable defenses may be presented” in all ITC investigations, but no such language is used in connection with post-grant reviews.
Thus, the PTAB declined to bar the petition, concluding that the doctrine of assignor estoppel does not provide an exception to the statutory mandate that any person who is not the owner of a patent may file a petition for an inter partes review.
Athena Automation LTD. V. Husky Injection Molding Sys. LTD., IPR2013-00290, Paper No. 18 (PTAB Oct. 25, 2013) (Bisk, joined by Fitzpatrick and Braden).
District of Delaware Issues a Bellwether Decision on Bellwether Trials
By Brock F. Wilson, Akin Gump
To narrow issues and promote settlement in “oversized patent cases,” on July 31, 2017, Chief Judge Leonard Stark of the District of Delaware issued an order that indicates a preference for bellwether trials on all issues for a subset of representative patents, instead of “reverse bifurcation,” wherein the issue of damages is addressed first. Intel Corp. v. Future Link Sys., LLC, Case No. 1:14-cv-377 (D. Del. July 31, 2017) (J. Stark).
In Intel, Intel Corporation (“Intel”) filed for declaratory judgment of noninfringement and invalidity on nine patents owned by Future Link Systems, LLC (FLS). In response, FLS filed counterclaims for infringement against Intel on 15 patents. In the pleadings, “FLS contends that it is entitled to approximately $10 billion in reasonable royalties, while Intel counters that it was liable for only around $10 million, a disparity of about 1,000 times.” (emphasis is original).
Characterizing the case as an “oversized patent case,” Judge Stark considered two alternative strategies for narrowing the issues and promoting settlement. The first approach considered was an “unusual” “reverse bifurcat[ion]” of the case, where a trial would be conducted on only damages for a subset of six of the 15 patents, “solely to obtain a verdict on the parties’ competing damages theories, on the assumption that all asserted patents are valid and infringed by all accused products.” The second approach considered was a “well-worn . . . ‘bellwether’ trial on liability and damages relating to just three patents.” Ultimately, Judge Stark adopted the “bellwether” approach, reasoning that it would “giv[e] the parties a near-term opportunity to obtain certainty . . . as to the value of a substantial subset of their disputes,” especially given that FLS placed one-third of the total value ($2.9 billion) on the three representative patents.
Balancing the “totality of circumstances” in favor of the bellwether approach, the court maintained, “obtaining clarity on the value of one third (even a nonrepresentative one-third, if that is what it is) of the case is at least as likely to promote settlement as would an advisory damages verdict on the entirety of the case,” which is “all that could be accomplished by a reverse bifurcation.” The court further reasoned, “Should, in a subsequent trial, even a single [infringement or validity] assumption with respect to any patent fail, the damages-only verdict with respect to (at least) that patent would become a nullity.” Finally, the court recognized the potential for portions of the case to carry on “for many, many years to come,” but offered to be “receptive to reasonable suggestions as to how to manage this case most efficiently, in light of its overwhelming size and complexity.”
The parties are set to go to a bellwether jury trial in September of this year, the outcome of which should significantly influence at least one party’s disparate valuation of the case.
Intel Corporation v. Future Link Systems LLC, 1-14-cv-00377 (DED July 31, 2017, Order) (Stark, USDJ)
District Court Addresses IPR Estoppel of Nonpetitioned Grounds and Appoints Expert to Determine Whether Skilled Artisan Could Have Discovered Prior Art
By Taehee R. Han, Akin Gump
In Oil-Dri Corporates of America v. Nestle Purina Petcare Company, the court recently held that a defendant who has filed a parallel inter partes review (IPR) petition is estopped from raising invalidity grounds in the district court that were not, but reasonably could have been, raised in the defendant’s IPR petition. Oil-Dri, 1-15-cv-01067 (ILND August 2, 2017, Order). In this case, Purina raised several invalidity arguments in district court, some of which were not raised in Purina’s IPR petition. Id. at 5.
The court’s analysis primarily rested on the Federal Circuit’s recent decision in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., which stated that 35 U.S.C. § 315(e) creates estoppel for any ground raised or that the petitioner reasonably could have raised “during . . . IPR.” Shaw, 817 F.3d 1293, 1300 (Fed. Cir. 2016). Post-Shaw, district courts permitted invalidity arguments that were petitioned, but not instituted (“noninstituted grounds”). The Oil-Dri court distinguished its case from Shaw, because the Shaw decision focused on noninstituted grounds rather than nonpetitioned grounds, and “[t]he Federal Circuit has not yet considered the precise issue of whether nonpetitioned grounds can give rise to estoppel.” Order at 13.
The Oil-Dri court stated that, “[i]f a party does not include an invalidity ground in its petition that it reasonably could have included, it necessarily has not raised a ground that it ‘reasonably could have raised during [the IPR proceeding].’” Order at 16. The court determined that IPR estoppel may apply if the petitioner reasonably “could have raised” its nonpetitioned grounds in its IPR petition. Order at 20.
Oil-Dri provided the declaration of a registered patent agent, who contended that a “reasonably skilled patent searcher” would have located the seven prior art references that Purina could have included in its IPR petition (the “Purina IPR”). Because Purina did not counter Oil-Dri’s position on four of those prior art references, the court determined that Purina is estopped from raising those four references with respect to the claims challenged in the Purina IPR.
Interestingly, the court left open the decision as to the remaining three references, and subsequently ordered both parties to confer and choose a court-appointed expert to offer an opinion on “whether a skilled searcher conducting a diligent search reasonably would have discovered [the three remaining prior art references].”
Oil-Dri Corporates of America v. Nestle Purina Petcare Company, 1-15-cv-01067 (ILND August 2, 2017).
Failure to Provide Patent Examiner with Copy of PTAB Decision Not Grounds for Inequitable Conduct
Justin J. Chi, Akin Gump
In a report and recommendation issued Tuesday, August 15, 2017, a magistrate judge in the Eastern District of Texas stated that failure to provide a patent examiner with a copy of a relevant post-grant review (PGR) institution decision does not make a patent unenforceable for inequitable conduct.
Tinnus Enterprises, LLC and Zuru Ltd. filed a patent infringement suit against Telebrands Corp. and Bulbhead.com, LLC. The patents at issue are U.S. Patent Nos. 9,242,749 (the “’749 patent”) and 9,315,282 (the “’282 patent”), which generally involve a system and method for simultaneously filling multiple water balloons. Defendants alleged that the ’749 and ’282 patents were unenforceable for inequitable conduct because, during prosecution, Tinnus failed to provide the examiner with a copy of a PTAB decision to institute post-grant review of U.S. Patent No. 9,051,066. Defendants also alleged that the patents-in-suit improperly claimed priority to the ’066 patent with the intent to deceive the USPTO. Plaintiffs then filed a motion for summary judgment of no inequitable conduct and no unclean hands.
In his report and recommendation, Magistrate Judge John D. Love stated that defendants’ motion is based on the assumption that there is some requirement for a patent applicant to disclose relevant PTAB decisions to the patent examiner, but defendants do not cite any authority for this position. Judge Love also noted that Tinnus’ prosecution counsel did disclose the ’066 patent PGR institution decision to the patent examiner during an interview. Furthermore, Judge Love stated that defendants’ position assumes that the patent examiner is incapable of finding relevant PTAB decisions.
Judge Love went on to write that defendants provided no explanation to support the allegation that Tinnus intended to deceive the USPTO. Judge Love stated that the more likely inference is that Tinnus’ prosecution counsel believed that he had satisfied any duty of candor by disclosing the ’066 patent PGR institution decision during the interview with the examiner. Defendants also did not cite to any statement or testimony from Tinnus, the inventor, or Tinnus’ patent counsel that related to mental state or any intentional actions. Because defendants could not show a specific intent to deceive, Judge Love recommended that plaintiffs’ motion for summary judgment be granted.
Tinnus Enterprises LLC v. Telebrands Corp., No. 6:16-cv-00033 (E.D. Tex. August 15, 2017, Report and Recommendation of United States Magistrate Judge) (Love, J.D.)